HIGHER MEDICARE TAX LATEST PROPOSAL TO FUND HEALTH CARE TAKEOVER

November 23, 2009

The latest proposal to pay for a government takeover of the health care system is to increase the Medicare tax for those that earn more than $250,000 a year. At this point, the deeper economic damage imposed by this tax hike is difficult to analyze because the proposal lacks specifics. But there is little doubt the tax hike would legally fall on those earning more than $250,000 a year so it remains in accordance with President Obama's campaign pledge, says the Heritage Foundation.

Nevertheless, those earning much less than $250,000 a year will feel the negative impact of the tax, explains Heritage:

Higher taxes on high earners will cause them to take fewer risks and cut back on investment.

This will lower wages and reduce the number of jobs created.

And much of the tax increase is likely to fall on small businesses, which will cause them to create fewer jobs and pay lower wages.

Workers earning much less than $250,000 a year will bear the full brunt of these jobs lost and lower wages.